109th Congress / House / 2nd session / Vote 425
- Question: On Passage
- Bill: H R 5970
- Vote description: Estate Tax and Extension of Tax Relief Act
- Vote type: Recorded Vote (Help)
- Result: Passed, 230-180, with 1 voting Present and 22 not voting.
- Date/time: July 29, 2006, 1:41 a.m. (Late-night vote)
- Republican majority opinion: Yes (Help)
- Democrat majority opinion: No (Help)
Key Vote Analysis
This bill would have raised the minimum wage, cut the federal estate tax permanently and extended several business tax breaks.
In a strange twist attributed to election-year politics, some traditional opponents of raising the minimum wage backed the bill, while some who had long pushed for an increase voted against it.
Business organizations have traditionally opposed minimum-wage hikes, saying that higher labor costs would hurt their ability to compete, raise prices for consumers and result in layoffs for low-wage workers. But when it came to this legislation, many business lobbyists put aside their concerns about increased wages because of their affinity for the bill's business tax breaks and a permanent lowering of the federal estate tax, which conservatives have railed against for years, labeling it an unfair “death tax.” Those opposed to the estate tax cut have argued that the measure is a gift to the rich that the government cannot afford, especially in an era of high federal budget deficits.
Labor organizations, usually staunch supporters of a minimum-wage increase, said reduced tax revenue resulting from the bill's tax cuts could lead to cuts in federal programs for the poor, such as food stamps. Other opponents argued that the current $2 million threshold means that few estates are ever taxed by the federal government. Tax legislation passed in 2001 has been steadily lowering the federal estate tax, and it is set to be phased out altogether by 2010. However, the 2001 legislation carries a sunset provision that would reinstitute the estate tax in 2011. Since 2002, much of the debate in Congress has been about whether the estate tax cuts should be extended permanently.
Supporters of the bill, including many moderate Republicans, said the bill was the right combination of help for the working class combined with tax cuts to help businesses. The Republican Party has pushed for years to make estate tax cuts permanent, and passage of the bill would have pleased anti-tax conservatives. Some conservative lawmakers facing reelection in November also hoped to tout their support of the bill as a sign that they are attuned to the needs of low-wage workers.
House Majority Leader John A. Boehner (R-Ohio) and Ways and Means Committee Chairman Bill Thomas (R-Calif.) devised the strategy of combining the minimum-wage increase with the tax cuts, along with input from Senate Majority Leader Bill Frist (R-Tenn.). Democratic lawmakers criticized the unusual combination of provisions as an election-year ploy.
In addition to the estate tax provision, GOP lawmakers wrote in a number of special tax benefits, such as a tax break for timber companies. Republican leaders also included popular business tax extensions from a separate pension bill, despite objections from some Republican committee chairmen.
The estate-tax provision would have amended the Internal Revenue Code of 1986 to exempt from taxation all estates worth as much as $5 million -- or $10 million for a married couple -- and apply a 15 percent tax rate to inheritances above that threshold, up to $25 million. For estates exceeding $25 million, the tax rate would be 30 percent. The proposed reduction would have reduced government revenue by an estimated $268 billion over the next decade, according to the Center on Budget and Policy Priorities.
The minimum wage provision would have increased the minimum wage, in three phases, to $7.25 an hour from the current $5.15. It would be the first minimum wage increase since 1997. Six years ago, the House voted for a similar bill that would have increased the minimum wage to $6.15 an hour and reduced estate tax rates, but the Senate never moved on the bill.
The House passed the bill 230 to 180 on July 29. But on Aug. 3, Senate Republican leaders fell short of the 60 votes needed to end debate on the bill and take it to the floor for a full vote.
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